Obama Proposes 2-Year Postponement for Medicare Cuts

As part of his $3.7 trillion federal budget for 2012, President Barack Obama has proposed postponing by 2 years the scheduled 25% cut in Medicare payments to physicians. If the proposal is enacted, the cuts would not go into effect until September 2013.

In December, Obama delayed the payment cuts by 1 year. The cuts themselves are part of the sustainable growth rate formula used by the federal government since 1997 to control Medicare spending. The sustainable growth rate formula calculates reimbursement rates via increases in the gross domestic product. Because health care spending has outpaced gross domestic product for the past several years, the sustainable growth rate has resulted in a series of negative payment updates.

In a letter to Congress, Obama called the 2-year fix “a down payment toward a permanent fix” aimed at “preventing a large cut in Medicare reimbursements for doctors that would jeopardize care for older Americans.”

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